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Mayor John Tory and Ontario Finance Minister Charles Sousa are clashing over whether the province left the door open to reversing a phase-out of social housing grants that has left a hole in Toronto’s budget.

Sousa said Friday Toronto has long been aware that the cash-strapped Ontario government was proceeding with elimination of the annual grant.

“We’ve said that clearly ... they were well aware of that from the beginning,” said Sousa as he began his cross-province pre-budget consultations in Toronto. “In fact, it was very clear that it would not be (continued) … it was understood a year and a half ago.”

Tory, who took office in December, said that was not the impression he had in meetings since then with Sousa’s boss, Premier Kathleen Wynne

“There were no promises made but there were no rejections given — but the finance minister was not at those meetings,” Tory told reporters at a news conference about his efforts to eliminate summertime road gridlock.

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The three-year clawback of “pooling” grants long paid to the city to compensate it for past provincial downloading of social housing has pushed Tory and Wynne into a fight the erstwhile friends do not seem to want.

The province announced in 2013 it was phasing out the grants. That eliminated $43 million in city revenue last year and in 2015. The annual shortfall grows to $128.8 million next year.

Tory approached Wynne hoping to get the phase-out reversed, or the time period extended, so that he could deliver a first budget that invested in transit and social services while keeping the property tax hike low.

City officials believed help was coming and were surprised when it was a recent offer to earn revenue by selling city land to the province along planned transit corridors. The city rejected that.

The province then offered the city a $200 million “market (interest) rate” line of credit secured by city land — a signal that, unlike with some past loans to Toronto, the province expects timely repayment.

Wynne’s government is going out of its way to assure other municipalities that it is not giving Toronto special treatment. The province felt the wrath of Ottawa and other cities in 2013 when it was accused of offering Toronto a sweetheart deal if it agreed to host a waterfront casino resort.

While the politicians clash swords, city and provincial staffers are quietly working on terms for the line of credit that underpins Tory’s proposed budget. Those terms are expected to be disclosed next week.

Councillor Paula Fletcher said the province should be doing more than giving Toronto a line of credit but, if that’s all that’s there, the interest rate should be 0.75 per cent to match the Bank of Canada’s key lending rate.

“It’s very rich coming from the minister who had the gas plant closed and moved to save his seat, to lecture Toronto on our budget which is balanced, and then to offer us a market-value loan to fix up the housing that they downloaded in the first place,” she said.

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